THE LONG-RANGE DEMOGRAPHIC ASSUMPTIONS FOR THE 2020 ...

THE LONG-RANGE DEMOGRAPHIC ASSUMPTIONS

FOR THE 2020 TRUSTEES REPORT

OFFICE OF THE CHIEF ACTUARY

SOCIAL SECURITY ADMINISTRATION

April 22, 2020

PRINCIPAL DEMOGRAPHIC ASSUMPTIONS

OVERVIEW

SECTIONS

1 FERTILITY

2

MORTALITY

3

IMMIGRATION

Demography, Page 2

Overview

Each year the Board of Trustees of the Federal Old-Age and Survivors Insurance (OASI) and

Disability Insurance (DI) Trust Funds provides an annual report to the Congress on the financial

and actuarial status of the Old-Age, Survivors, and Disability Insurance (OASDI) program. The

Office of the Chief Actuary (OCACT) produces projections of future cost and income based on

three separate sets of long-range (75-year) assumptions for key demographic variables. The

intermediate (alternative II) set of assumptions represents the Trustees¡¯ best estimate for future

experience, while the low cost (alternative I) and high cost (alternative III) sets of assumptions

are more and less favorable, respectively, from the perspective of program cost as a percent of

taxable payroll. In addition, the intermediate assumptions serve as the central tendency for the

stochastic projections presented in the OASDI annual report to the Board of Trustees (the

¡°Trustees Report¡±). This memorandum presents the demographic assumptions used in the 2020

Trustees Report.

At the time assumptions were selected for the 2020 Trustees Report, it was too early to

anticipate the potential effects of the COVID-19 pandemic. The magnitude and duration of

effects on the population and the economy are still unclear. Therefore, the potential effects

of the pandemic are not reflected in these assumptions.

The basic demographic assumptions are:

?

?

?

The total fertility rate, along with the single-year-of-age birth rates,

The annual rates of reduction in central death rates by broad age group (0 ¨C 14, 15 ¨C 49,

50 ¨C 64, 65 ¨C 84, and 85+) and cause of death (cardiovascular, cancer, violence,

respiratory, and all other), and

Immigration levels, by age and sex, of lawful permanent resident (LPR) new arrivals,

LPR and citizen exits, adjustments of status, and other-than-LPR entrants; and otherthan-LPR rates of exit.

For the 2020 Trustees Report, there is only one change in the long-range values for these basic

assumptions from those used in the 2019 Trustees Report. The ultimate total fertility rates for all

alternatives were decreased by 0.05 child per woman. The following table shows values for the

ultimate fertility assumption and 75-year summary measures for the mortality and immigration

assumptions. Note that some of the values of the summary measures have changed slightly due

to the incorporation of new data and their effects on the transition period.

Demography, Page 3

Key Demographic Assumptions and Summary Measures for the Long-Range (75-year) Projection Period

2019 Trustees Report and 2020 Trustees Report

2019 Trustees Report

Alternative

2020 Trustees Report

Alternative

I

II

III

I

II

III

I

II

III

Ultimate total fertility rate

(children per woman)

2.20

2.00

1.80

2.15

1.95

1.75

-0.05

-0.05

-0.05

Average annual percentage

reduction in total age-sex-adjusted

death rates for the 75-year

projection period

0.41

0.77

1.16

0.40

0.76

1.15

-0.01

-0.01

-0.01

Average annual net LPR

immigration (in thousands) for the

75-year projection period

1,000

787

595

1,000

788

595

0

1

0

601

478

354

598

474

351

-3

-4

-3

Average annual net other-thanLPR immigration (in thousands)

for the 75-year projection period

2020 Trustees Report Less

2019 Trustees Report

In total, the demographic changes resulted in a decrease in the OASDI actuarial balance of about

0.13 percent of taxable payroll under the intermediate assumptions. More specifically:

? Law or policy changes related to the demographic assumptions (an assumed one-year

delay in the scheduled phase-out of the Deferred Action for Childhood Arrivals, or

DACA, program) had a negligible effect on the actuarial balance.

? The Trustees reduced the ultimate total fertility rate from 2.00 to 1.95 children per

woman, as mentioned above. This change decreased the actuarial balance by about 0.11

percent of taxable payroll.

? Updated data and implications for the transition to the ultimate total fertility rate

decreased the actuarial balance by about 0.04 percent of taxable payroll.

? Updated data and implications for the transition to the ultimate values for mortality

improvement increased the actuarial balance by about 0.04 percent of taxable payroll.

? Updated data and implications for the transition to the ultimate values for lawful

permanent resident (LPR) immigration, updated other-than-LPR immigration data, and

other minor data updates combined to decrease the actuarial balance by about 0.02

percent of taxable payroll.

The remainder of this memorandum provides details regarding the historical values and future

values for each of the demographic assumptions, and the basis for the assumptions.

Demography, Page 4

1. FERTILITY

ASSUMPTIONS FOR THE 2020 TRUSTEES REPORT

OFFICE OF THE CHIEF ACTUARY, SSA

TABLE OF CONTENTS

PAGE

1.1 SUMMARY ................................................................................................................................. 2

1.2 HISTORICAL EXPERIENCE ........................................................................................................ 2

1.3 ASSUMED FUTURE BIRTH RATES ............................................................................................. 3

TABLE 1.1: PAST AND PROJECTED TOTAL FERTILITY RATES FOR THE UNITED STATES ................................................... 6

TABLE 1.2: HISTORICAL TOTAL FERTILITY RATES, BY COUNTRY ..................................................................................... 7

CHART 1.1: HISTORICAL TOTAL FERTILITY RATES FOR THE UNITED STATES ................................................................... 8

CHART 1.2: CENTRAL BIRTH RATES FOR FIVE YEAR AGE GROUPS: HISTORICAL AND ALTERNATIVE II PROJECTION ... 9

CHART 1.3: HISTORICAL AND PROJECTED TOTAL FERTILITY RATES ............................................................................... 10

CHART 1.4: HISTORICAL AND PROJECTED TOTAL FERTILITY RATES BY BIRTH COHORT ............................................... 11

CHART 1.5: PAST AND FUTURE EXPECTED BIRTHS PER WOMAN BASED ON THE NATIONAL SURVEY OF FAMILY

GROWTH (NSFG)......................................................................................................................................................... 12

Fertility, Page 1

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